Verdi Strike in Germany Affects the Glycol Ether Supply Chain

The Glycol Ether's prices have risen during May 2023 amid affected supplies and decreased production rates. The feedstock Ethylene supplies weakened at the beginning of the month. German Trade Union Verdi's strike affected logistics and trading activities. It negatively affected the production rates, and producers raised the quotations in the initial week of May 2023 amid the stable to low availability of previous stocks.

The Verdi Strike at the beginning of the month affected the supply chain activities. Meanwhile, the available inventory levels were stable to low during the initial week of May due to curtailed production rates because of the initially low demand from end-user industries. Consequently, the price quotations of Glycol Ether increased amid stable demand sentiments from Asian importers. Similarly, in India, the price trend was firm initially due to increased price quotations from Germany.

As per the ChemAnalyst data sources, producers increased the Glycol Ether prices by 2.3% during May 2023, and Ethylene Glycol Mono Butyl Ether FOB Hamburg witnessed USD 1360/MT at the end of the month. Similarly, in India, Glycol Ether prices rose marginally by 0.3% during the month.

However, from the second week of May, prices started declining again due to dampened offtakes from the market. Simultaneously, supply chain activities improved during the mid of the month. Consequently, the feedstock Ethylene prices dropped at the end of May, reducing upstream cost support on Glycol Ether production costs. Furthermore, the variable production costs of Glycol Ether decreased due to weak energy costs amid a fall in Natural Gas prices due to sufficient availability and the temperature rise.

Meanwhile, buyers were cautious in making purchases amid increased bank interest rates by European banks to control inflation. The consumption rates of Glycol Ether were sluggish from downstream cleaning agents and paint manufacturers. Because of this, buyers' inquiries for Glycol Ether have been low for the past few months. The producers curtailed their production rates, and Europe's manufacturing Purchasing Manager's Index fell during May 2023 and remained below 50, indicating a contraction in manufacturing activities.

As per the anticipation, "In Europe, the Glycol Ether prices will increase in upcoming weeks due to the estimated improvement in demand from importers. The production costs will increase with the rise in energy costs due to the recent rebound in Natural Gas prices in the European region. Meanwhile, summer holidays in Germany and increased layoff practices may decline production rates. Simultaneously, bank interest rates are consistently rising amid high inflation in the country. Furthermore, supply chain activities may get affected due to the changes in Rhine River water levels in the upcoming weeks and may affect the Glycol Ether supplies to the importers."